462.00R296A/40

Memorandum by the Secretary of State of a Conversation With the French Ambassador (Claudel)

I had sent for the French Ambassador and when he came I told him that this was one of those rare occasions when I had something serious to say to him. He laughed and said that I always had something serious to say. I then told the Ambassador that M. Laval had recently made a speech before the Chamber of Deputies in which he had forecast conditions which France would impose upon the coming readjustment of Germany’s condition. I had before me the speech in an article from the New York Times of November 27 as reported in a cable from P. J. Philip, dated November 26, Paris, and I read to him the following paragraph:

“We will accept rearrangement for a limited time, but will not consent to a revision of reparations unless reductions in an equal measure at least are consented to with respect to war debts. We will demand payment of the unconditional annuities, and we will not accede to priority being given to private debts over our reparations.”

I told the Ambassador that my remarks were addressed to two aspects of this speech. I said the first was that we here had hoped for and expected a full, impartial and expert exploration into Germany’s economic condition and her capacity to pay by the Basle Committee invoked under the Young Plan; that we expected an untrammeled report of a scientific character upon the facts involved in Germany’s condition and that we were justified in this by the presence on the Committee of such men as M. Rist of France, Mr. Layton of Great Britain, and Mr. Stewart of America. But I said that such a statement as that of M. Laval, before the Committee had entered on its work, limiting the conditions of any settlement, would necessarily tend to hamper and limit their work and destroy its value. I said, in a word it tended to put handcuffs on the Committee. I told him, in the second place that in order to avoid any possible misunderstanding I wanted to make it clear to Mr. Laval and the French Government that some of the things which he asserted as France’s policy were not made under any agreement with us but that as to some of them we held an entirely different view.

I then took up the points in order. I said his statement that “we will not consent to a revision of reparations unless reductions in an equal measure at least are consented to with respect to war debts” in short meant that America was to pay the whole bill and that France even reserved the right to make a profit out of the transaction; that we certainly did not agree to that and no government in America ever would agree to it. I said his second statement that “We will [Page 353] demand payment of the unconditional annuities” was a matter in which we had taken no position because it was a matter for the European countries, but that I wanted to make it clear that what Mr. Laval stated had not been a subject of agreement between Mr. Hoover and Mr. Laval. Finally, I said that with his statement “we will not accede to priority being given to private debts over our reparations” we were inclined to differ entirely. I said that we thought his position would mean the entire destruction of Germany’s credit; that if her private debts were to be subordinated to her public debts she would never again be able to raise money; and that the important matter now was to save her from economic disaster—and this would make economic disaster almost inevitable.

I then read to the Ambassador the aide-mémoire which is attached to this paper49 and he took away a copy. We then had quite a long talk on the matter. He told me that Mr. Laval had surprised him after his talk with Mr. Hoover by saying that there was some understanding as to war debts somewhat like that stated here. I told the Ambassador that that was impossible; that what Mr. Hoover had stated was the same as what was stated in the joint communiqué, which in substance was that provided initiative first came from Europe and an investigation into Germany’s capacity to pay within the Young Plan was made and showed that she was not capable of paying, we would then suggest to Congress a reopening of the debt settlement of the various countries who might be affected by the result of the German inquiry. The Ambassador said he had been astonished when M. Laval made the statement to him but that he evidently had some such idea. I said I did not see how it had been possible because the matter had been made very clear. At the end of our conversation I impressed on the Ambassador the fact that what I wanted, if possible, was to see that handcuffs were not placed upon the Basle Committee which would prevent them from making a full and helpful report as to Germany’s condition and capacity to pay, and secondly to prevent any misunderstanding as to what agreements were made between the French Government and us.

H[enry] L. S[timson]
  1. Infra.